Broker
A broker is a liaison party in trade deals that brings sellers and buyers together. For example, a stock broker matches investors with global exchanges, and a real estate broker facilitates the sale of a property.
Due to the fact that securities exchanges can accept orders from individuals or companies that are members of that particular exchange, individual traders and investors require the service of brokers to execute these transactions following their request. More recognised brokers, because of their high-profile, have access to a wider set of markets and can also provide direct access to highly competitive events, such as an IPO.
There are various kinds of brokers that differ on the basis of assets under their management. Some of the most popular types of brokers dealing with other asset classes are real-estate brokers, commodity brokers, automobile brokers.
Full-service brokers offer a range of different services, the most common being:
- Market intelligence
- Portfolio development for high-net-worth individuals
- Cross-sale of different financial products
- Retirement planning
Discount brokers
Brokerage services used to be the prerogative of the more affluent parts of the society. However, with the emergence of the Internet and the democratisation of financial services, the industry has witnessed the emergence of discount brokers.
Discount brokers have attracted many novice investors because they offer significantly smaller fees. Their business model is conventionally built on small fees that are charged per trade. They do not offer personalised services, such as investment advice, however, they offer intuitive online trading platforms that attract a growing number of self-directed investors. Nowadays, an increasing number of brokers offer fee-based investment products, such as managed investment accounts. Some of the most popular discount brokers include Fidelity and Interactive Brokers.
